CSR REPORT 2016 CONTENT Company Efficient logistics Key performance structure is key to retail indicators 04 10 28 Trust as the Fighting Fun and Independent foundation of food waste exercise practitioner’s our business limited assurance 06 12 20 report 30 Improved Reporting information to approach enable healthy choices 22 32 Making responsible Reporting Company shopping affordable criteria and information for everyone 24 performance 34 38 Transparency Providing on economic people with impact 08 opportunity 16 Page 02 Page 03 Dansk Supermarked Group Dansk Supermarked Group CSR Report 2016 CSR Report 2016 COMPANY STRUCTURE Dansk Supermarked Group is a 100 % Danish-owned company, owned jointly by Salling Fondene (81 %) and A.P. Møller - Maersk (19 %). The report covers retail formats føtex, Bilka and Netto in Denmark, the Salling department stores, e-commerce and Netto Germany, Netto Poland and Netto Sweden; all part of Dansk Supermarked Group. The franchises Starbucks and Carl’s Jr. are not included in the report. Købmand Købmand Herman Sallings Fond Ferdinand Sallings Mindefond 100 % 70,81 % 29,19 % F. Salling Invest A/S F. Salling Holding A/S A. P. Møller Mærsk A/S 39,11 % 41,89 % 19 % Dansk Supermarked Group 100 % Salling føtex Bilka Netto Wupti Starbucks Carl’s Jr. Page 04 (Salling.dk, Bilka.dk, føtex.dk and føtexdagligvarer.dk are covered by their respective formats) Page 05 Dansk Supermarked Group Dansk Supermarked Group CSR Report 2016 CSR Report 2016 TRUST AS THE FOUNDATION OF OUR BUSINESS A LETTER FROM OUR CEO, PER BANK Everyday Dansk Supermarked Group touches Our attention this year has been to develop millions of people. each focus area further. It is not possible to include every effort and initiative in this year's With 9 million shopping trips per week, our report, so we have decided to include the 51,000 employees across Denmark, Germany, most important initiatives and results. As so- Poland and Sweden handle products sourced mething new we have included an overview from more than 130 countries. This brings with of our total tax contribution and an in-depth it great responsibility, which we fully recog- look at our commitments to reduce food nise and embrace. waste. As Denmark’s largest retail company, our While the report itself is limited to 12 months, main focus will always be the further develop- the perspective we have on our responsibility ment of a sustainable business. Our financial is far more long term. At Dansk Supermarked strength enables us to make conscious long Group, we believe that we can make a posi- term decisions to the benefit of our custo- tive difference for our customers, our emplo- mers, colleagues, suppliers and the citizens yees and our surroundings. Therefore, we will of the communities we are part of. continue to strive to do so by giving people the opportunity to improve everyday life; not In 2015 we formed a new CSR-strategy alig- least by providing customers with safe and ned with the UN Sustainable Development responsible products, allowing all employees Goals with a focus on three areas where to utilise their full potential, and by sourcing Dansk Supermarked Group has significant conscientiously in a world of growing com- impact, and where our business could be plexity. positively or negatively impacted. TOPIC SCOPE SUSTAINABLE DEVELOPMENT GOALS Equal Access to Our employees Jobs and Careers Healthy Living and Our employees Well-being and our customers Responsible Consump - Full value chain tion and Production Page 06 Page 07 Dansk Supermarked Group Dansk Supermarked Group CSR Report 2016 CSR Report 2016 TRANSPARENCY ON ECONOMIC IMPACT At Dansk Supermarked Group, we recognise Total tax contribution that taxes and duties have a significant eco- 8% – divided into categories Taxes and duties collected nomic impact on society, and we wish to be 1 Total DKK 7,219 million Total DKK 6,496 million transparent about our tax contribution in the 7% 3 countries where we operate. 5% Taxes and duties collected consist of value 2% added tax, taxes withheld from employee We have operating companies in Denmark, 1% wages and excise duties. Sweden, Germany and Poland, but the largest 2% activity occurs in Denmark. The included amount for value added tax 36% 56% is calculated as the net VAT payment to the We do not operate companies in low tax state, meaning VAT on sales minus VAT jurisdictions and we do not utilise special tax payable. optimisation models designed with the pur- 50% pose of tax avoidance. Collected excise duties in Denmark (e.g., on chocolate, alcohol etc.) are only included for According to the published corporate tax Employee taxation imported goods as excise duties on locally record for 2015, F. Salling Holding A/S, which 33% VAT produced products are paid to the authorities is the administration unit for Dansk Super- Excise duty by the manufacturing companies. marked Group, is the 15th largest corporate income tax payer in Denmark with a total corporate tax payment of DKK 303 million. F. Salling Holding A/S is responsible for paying Corporate tax all corporate tax to the authorities on behalf of Energy tax incl. PSO the Danish companies in the Group. Environmental tax Property tax Employee taxation In 2015 the total tax contribution from our 18% Value added tax (output minus input VAT) Taxes and duties borne company amounted to DKK 7,219 million. Total DKK 723 million This includes both taxes paid indirectly by Excise duty (imported good only) 4 our company (taxes collected), such as VAT, Our direct taxes consist of corporate tax, employee income tax etc., and taxes paid di- energy tax, environmental tax and property rectly (taxes borne), such as corporate income 10% tax. tax, property taxes etc. 51% Total tax per country The largest amount of taxes and duties borne – divided by countries relates to corporate income tax (51%). The 2 Total DKK 7,219 million Danish companies in the Group paid a total 21% corporate tax payment of DKK 303 million. Sweden 345 Additionally, DKK 65 million was paid abroad in corporate tax. Poland 234 Corporate tax Energy tax incl. PSO Environmental tax Germany 544 Property tax Denmark 6,096 0 5,000 10,000 ¹ For practical reasons the numbers only include tax derived from business activities covered by our financial reporting in 2015 as the 2016 numbers were not available for this report. ² The presentation is made in accordance with the standardised Total Page 8 Tax Contribution methodology. Our Tax Policy can be found at dansksupermarked.com. Page 9 Dansk Supermarked Group Dansk Supermarked Group CSR Report 2016 CSR Report 2016 EFFICIENT LOGISTICS IS KEY TO RETAIL The number one priority in our logistics team is to keep the shelves stocked to ensure custo- mers find what they are looking to buy. Surveys show that this is a key element in a positive customer experience and one that determines customers’ choice of shopping destination. In terms of sustainability, a key issue in the sup- ply of goods from manufacturers to our stores is the CO2 emissions from transportation. It is estimated that freight transport accounts for 73,20% approximately seven percent of global carbon emissions, making it a significant contributor to ROAD climate change. We strive to use the most CO2-efficient mode of transport while at the same time considering parameters such as cost and speed to secure freshness or seasonality. From our manufactu- 6,40% rers and suppliers, goods are transported by RAIL road, sea, rail and occasionally by air to our distribution centres. Most of the non-food items from the Far East arrive by sea via some of the 4,83 kg CO / PALLET STORE most efficient ships in terms of CO2 emissions 2 in the shipping market. The majority of goods DISTRIBUTION arriving via road from Europe are food items 20,20% CENTER as this is nearly always the only realistic option SEA when balancing need for freshness and cost. For transportation between our distribution centres and stores, we employ third parties. Based on data from our transport service providers, we have calculated that 4.83 kg of CO2 is emitted per pallet delivered from our 0,20% distribution centres to the stores in Denmark. AIR For 2016 the total amount of CO2 emitted was 18,157 tonnes. Our aim is to reduce the emis- sions per pallet through better utilisation of trucks and increased deliveries outside rush hours. Page 10 Page 11 Dansk Supermarked Group Dansk Supermarked Group CSR Report 2016 CSR Report 2016 FIGHTING FOOD WASTE FOOD WASTE IN OUR FORMATS (TONNES) In Denmark more than 700,000 tonnes of We have focused on food waste for several food is wasted every year, equalling 140 kg years without, however, being able to mea- føtex 10,514 per person living in Denmark. sure by weight until 2015 when the relevant system changes were fully implemented. Bilka 4,695 Based on the work we did in 2013 and 2014, Netto 17,632 we believe that the official figures from the Food waste in Denmark (tonnes)* Environmental Ministry reports are fair *Source: Danmark uden affald II Feb. 2015, Ministry of Total* 33,364 Environment assessments of the level of food waste in 2014. Taking outset in these figures, the 0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 Group produced 42,826 tonnes of food Households 260,942 waste in Denmark in 2014. * Incl. Salling and warehouses Retail 163,000 Dansk Supermarked Group has set a target to reduce this baseline figure of 42,826 ton- HELPING CUSTOMERS PREVENT nes of food waste by 50% in 2030. The Food industry 133,000 FOOD WASTE reduction target is equivalent to 21,413 ton- nes and the target is in line with the UN Every part of the value chain has an obliga- Primary production 100,000 Sustainable Development Goal 12.3.